Obeids and ICAC feel blow of The Hammer in NSW Supreme Court

There is no doubt that Eddie Obeid and his sons are, by a country mile, the big losers from this week’s ruling by David Hammerschlag in the NSW Supreme Court.

The Hammer demolished their case against the Independent Commission Against Corruption and he did so using language that was guaranteed to grab headlines.

This took it to a new level. It was no longer a mere failure by a former politician to prove that the commission had denied him procedural fairness and had engaged in misfeasance in public office. This was a judicial knife job.

Parts of the Obeids’s case, according to the Hammer, were manifestly untenable, fanciful, without merit, without substance and bordering on the eccentric. He left absolutely no doubt that the Obeids had lost. Yet if anyone reads the entire 108-page judgment, other losers emerge.

This decision has inflicted serious damage on the standing of two of ICAC’s senior investigators, Grant Lockley and Paul Grainger.

They have fended off a formal finding of liability, but the Hammer’s findings could prove just as damaging to ICAC as the agency’s findings of fact in last month’s report from Operation Spicer on electoral funding.

In November 2011, Lockley and Grainger were among a team of 26 who had been authorised to seize documents from offices at Sydney’s Birkenhead Point that were being used by the Obeids.

Lockley and Grainger went too far. They were authorised to seize only those categories of material that had been specified in a search warrant issued by deputy registrar Stephen Lister. Hammerschlag found they went beyond that and made video records of documents they knew were not covered by the terms of the warrant.

Just two factors prevented the Obeids from transforming this finding into a ruling that Lockley and Grainger had engaged in misfeasance in public office.

The first — and I am not making this up — is that the judge ruled that these ICAC officers were not public officials when they were inside the Obeids’s offices, rifling through a safe, seizing documents and making videos.

The reasoning that allowed the judge to reach that conclusion is this: they were exercising powers that stemmed from the search warrant, not from any position they occupied at ICAC, and that meant “the hallmarks of public ­office are absent”.

Even if he had ruled that they were public officials, they would still have been able to ward off tortious liability because the judge also found their actions had caused no damage to the Obeids.

As far as the law of torts is concerned, that’s the end of the story. But as ICAC knows, adverse findings can have quite an impact. When the community comes to understand all of Hammerschlag’s judgment, the implications are clear: Lockley and Grainger are still on the hook, and wriggling alongside them is ICAC.

The Supreme Court has now made an unqualified finding that two of this organisation’s ­senior investigators knowingly ­exceeded restrictions on their ­coercive ­powers. For any government agency, such a ruling should cause introspection. But ICAC, which has form when it comes to exceeding its jurisdiction, should be uniquely sensitive to any recurrence. The last time this happened, the remedy for the commission’s excess of zeal required a ruling from the High Court and retrospective legislation.

The question, then, is what does ICAC plan to do now that there is no doubt senior officers have breached the limits on their powers?

The day after Hammerschlag’s ruling, I emailed ICAC’s manager of communications and media asking if the commission proposed to take any action on the finding that Lockley and Grainger had knowingly exceeded their powers. The response is unlikely to reassure those who believe coercive power should always be subject to the law: “The commission does not comment on staff matters.”

This affair cannot be written off as a simple mistake by a couple of novices. Lockley is a senior financial investigator and Grainger is a senior investigator whose duties, according to Hammerschlag, include “leading, managing and mentoring investigation staff to ensure allegations of corrupt conduct are thoroughly investigated”.

This is not the first time Grain­ger has come to public notice. He was one of the officers who conducted the investigation of former NSW emergency services commissioner Murray Kear. That investigation, according to a ruling in May by Magistrate Greg Grogin, “was conducted in an unreasonable and improper manner”. Charges against Kear were dismissed. (See accompanying article.)

In 2014, Grainger helped re-enact the seizure of telephones from the home of deputy senior crown prosecutor Margaret Cunneen SC. The original seizure, a week earlier, had been unlawful, according to a report in December last year by the agency’s independent inspector David Levine.

Unfortunately for Lockley and Grainger, their conduct during the raid on the Obeids was captured on video by another ICAC officer, Darren Curd. This week’s judgment includes slabs of transcript from the video that, according to the judge, shows they knew they were exceeding their powers.

He did not accept explanations that their counsel submitted on their behalf. An argument was “unconvincingly” put on behalf of Lockley that one of the documents might have related to Locaway Pty Ltd, the Obeid company that occupied the Birkenhead Point premises, and which was named in the search warrant.

“This connection was not established as a fact and there is no reason to think that this notional possibility crossed the mind of Lockley and Grainger”, the judge said.

He rejected an argument submitted on behalf of Grainger that it was permissible to seize and therefore make a video record of the documents because he believed them to be evidence that would be admissible in criminal proceedings or which may have been concealed, lost, mutilated or destroyed.

“I reject this submission. There is no evidence of any such belief on the part of Grainger,” the judgment says.

The really curious aspect of this affair is that these men, when ­accused of misfeasance in public office, did not to turn up in court and give evidence in their defence. The judge drew adverse inferences and he said so in his judgment.

“No reason was given for Lockley not entering the witness box,” the judgment said. “It may safely be inferred that his evidence would not have helped him.”

Grainger also declined to give evidence in person and argued that no adverse inference should be drawn because he had suffered an intracerebral haemorrhage early this year and had undergone surgery on March 30.

He produced reports from a neurosurgeon and a consultant neurologist warning that giving evidence in court could adversely affect his health. The Obeids produced a report from a different neurologist that said Grainger was “fit to give evidence” — an assessment endorsed by the judge.

“In the circumstances, I think it would be permissible for the court to infer that his evidence would not have assisted him,” the judgment said about Grainger.

“The documents were manifestly not covered by the warrant. The manner in which they were videoed, that is to capture the full detail of the documents together with the fact that they were not seized, is inimical to the suggestion that they were videoed for the purpose of assessing whether they were covered.

“I find that both Lockley and Grainger appreciated that the documents were not covered.”

In a perfect world, the ICAC would be moving quickly to reassure the community that it has taken on board Hammerschlag’s findings. Because Grainger’s role involves “mentoring investigations staff”, the commission might also need to examine what its staff are being taught.